OFFSHORE COMPANY: EXCEPTIONAL ADVANTAGES FOR BUSINESSES. FISCAL ENGINEERING, PARADISIS AND TAX LISTS

What is an offshore company? - An offshore company is a company registered in a country that offers a very advantageous, better to say non-existent tax system, provided that the activities are not carried out in the territory of registration

Specifically, offshore companies have three characteristics:

1) must be registered as legal persons within the jurisdictions in which they were established;

2) investors must have their domicile outside the jurisdictions in which the companies have been established;

3) the company must carry out the whole of its activity outside its registration jurisdiction, it would be considered otherwise as a "resident" company and therefore taxed as such. Most people associate the term "offshore company" with an instrument for increase tax efficiency.

What are the ADVANTAGES OF THE OFFSHORE COMPANY? - The most motivations for investors and companies choose to use offshore tax planning and offshore companies include:

• Tax Reduction;

• Protect assets;

• Manage risk;

• Maintain privacy;

• Avoid bureaucracy;

• Reduce costs;

• Improve activities;

• Free redistribution of profits and capital;

• Access to tax treaties in the various jurisdictions;

• Security of property rights;

• Access to low-cost areas of services;

• Bank privacy and customer respect;

• Availability of international experts;

• Customs exemptions;

• Exchange convertibility;

• Government cooperation;

• Fair treatment;

• Territorial taxation on foreign income;

• Minor restrictions;

• Attractiveness for foreign Investments;

• Higher returns;

• The availability of sophisticated banking facilities;

• Reduced taxation;

• Political stability of the country.

What does it mean and why choosing the offshore solution? - Many colleagues think that offshore companies, unlike onshore companies, were born exclusively to evade taxes; in reality, it is absolutely not like that. The first thing that is clear is that through these legal structures it is certainly possible to move some particularly important activities in foreign jurisdictions, and through this choice, often you also get a tax saving or greater protection of assets from claims made by creditors or in cases of divorce.

Features of offshore companies: clarifications on offshore company law and on privacy - Even if all offshore companies differ according to company legislation in the relevant jurisdiction, all offshore companies tend to enjoy certain key features:

• They are not generally subject to taxation in their jurisdiction;

• The business regime will be designed to promote business flexibility;

• The regulation of business activities will normally be lighter than in an on-shore country;

• The absence of taxation or regulation in the national jurisdiction does not, of course, exclude the company involved in taxation or settlement abroad.

Another common feature of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. At one end of the scale, in the Cayman Islands and Delaware, practically no public information is available. But at the other end of the scale, Hong Kong companies submit annual statements with details of directors, shareholders and annual accounts. However, even in jurisdictions where relatively little information is available to the public, most jurisdictions have laws that allow law enforcement authorities (local or from abroad) to access relevant, and in some cases, private information.

In relation to flexible company law, most offshore jurisdictions normally remove the company segments such as minimum capitalization rules, financial assistance rules and limitations on business capacity and business advantage. A large number of countries have also removed or overridden rules regarding the payment of principal or restrictions on the payment of dividends. Beyond the common themes, a number of jurisdictions have also adopted special business arrangements to try to attract business through the offer of business mechanisms that allow complex business operations or reorganizations in an easier way.

Depending on the legislative model adopted by the jurisdiction, better conditions may be allowed for the establishment of economic activities or natural persons, ensuring also important tax exemptions, for those who create an offshore company there, as in the case of the Principality of Monaco where the incomes of natural persons are not taxed.

In the case of Panama, for example, the tax does not apply to income from abroad if an offshore company is opened in Panama. In short, each country has adopted legislation to intercept a certain type of clientele, which is now interested in tax exemption on some income and now on reduced taxation on activities for which there are too high tax burdens to remain competitive.

Tax engineering: what is it? - To better understand the meaning of this definition, we must start from the assumption that it is optimized as a tax engineer is able to identify, according to the economic activity carried out by the customer, those oasis or offshore countries where it is possible to find the conditions to obtain a low level taxation, perhaps even combining transactions between different territories, to benefit from a particularly mild final fiscal framework. After identifying the best jurisdictions, between offshore and onshore companies, tax planning work also requires an analysis of all the rules - and in particular the tax treaties, as well as the double taxation agreements - thus allowing the client to pay legally less taxes than he would have paid without resorting to tax engineering.

To avoid overloading one's own entrepreneurial activity of burdens and, again, often just to allow the survival of one's own company, it is essential to rely on the advice of a tax engineer who really knows the legislation, creating triangulations and operations that are always permitted by law, so as not to expire in the case of tax evasion, which unlike the circumvention - we remember - is a real crime.

Why is there the offshore and the uses of these companies? - On the other hand, the existence of offshore is due to the presence of so-called tax hells, those jurisdictions where there are too many tax burdens (often accompanied by a twisted and difficult to understand legislation). Simon describes well the main 5 uses of these companies: "The most important thing to understand for offshore entities is that they are not illegal, neither in creation nor in use. It can be the activity of the entities and shareholders who can violate the law, but this applies to any company. The second important thing to know is that offshore entities can also benefit private individuals. Do not be afraid to use an offshore entity for a legitimate purpose, such as

Holding in another country

Many people use a local entity to keep property in another country. In fact, in some cases it is possible to request as foreign I know of a title of property in another country. A simple example is that in the presence of large distances between the owner and the property. A foreigner can not hold a title to a piece of property in his name in Mexico if that property is 50 kilometers from the ocean. In this case, you must (ie, it is required by law) to use a Mexican trustee, an offshore entity by definition. Other countries impose restrictions on the foreign ownership of properties that may also require the use of an offshore entity. In addition, it is also possible to use an offshore entity to

Minimize the succession problem

Owning property in your own name in another country means that when you die, your heirs must face all the paperwork in that country. In some cases, this may mean being subject to inheritance laws that require goods to be distributed according to local law, which may not correspond to your wishes. If you use a company in a jurisdiction that allows the direct inheritance of the property or its actions, it is possible to avoid all the problems present in other countries. For someone who owns multiple properties in multiple countries, using an offshore holding company is simply a practical administrative practice, nothing more.

Provide some asset protection

In the legitimate offshore world, the word "offshore" is not synonymous with illegality but of asset protection. A company or LLC can provide asset protection; however, if asset protection is the goal, an offshore trust may be the most effective entity. Lawsuits are a national pastime in many countries and the best way to protect assets and prevent them from being attacked by some creditor is to move them to offshore jurisdiction with the help of an offshore facility, so that what you legitimately earned, be protected.

Diversification of investments

Maybe you're not worried about asset protection. However, it should be interesting to diversify the investment portfolio internationally. Creating an offshore entity can facilitate this. Most offshore fund brokers and mutual funds will not accept the people of many countries as investors, due to concerns about the regulations related to some backward tax systems. However, they accept offshore entities as customers, even if such entities are owned by private individuals. The use of a structure allows the brokerage company to comply with financial rules and allows the owner of the structure to access a wider range of global investments.

To do business actively

Sometimes an offshore company is an effective company. That is, an offshore company can be used to run a business in another country or to separate a main business from an offshore branch. Include your business abroad for the same reasons that you incorporate in the United States - to limit the liability of the company's shareholders (which brings us back to asset protection). After the Panama Papers scandal came out, as Cameron teaches, owning an offshore entity does not necessarily equate to being engaged in illegal activities. However, others are taking out the Panama Paper documents as an opportunity to paint all offshore entities in the same negative way.

The truth, however, is that having an offshore entity is not illegal and can also offer important benefits for individuals who are trying to protect their assets and provide, for example, their future retirement. Far from scandalous, these advantages can sometimes be simply practical and administrative.

What jurisdiction should I choose for my company? - The most important factor to consider when choosing jurisdiction is to verify that the company is established in a country that has:

1. Communication means;

2. Political and economical accountability;

3. Good reputation;

4. A sophisticated company right.

The jurisdictions with which we work enjoy the advantages mentioned above. That said, the right choice of jurisdiction also depends on where you live and the activity you want to do. Our counselors can help you understand which jurisdiction will make more sense taking into account your personal situation.

In general, the Seychelles or Belize are recognized for their low cost, speed in the creation process and for excellent confidentiality. Certain customers also want to consider onshore jurisdictions such as Hong Kong, Cyprus, or UK to offer greater guarantees to their customers or suppliers.